Covid and Brexit Take Their Toll: UK Business Bankruptcies Surge by 52% in Two Years

In 2023, the UK saw a significant increase in company bankruptcies due to inflation and the extended effects of the Covid pandemic, with 30,199 businesses facing insolvency actions – a 52% jump from 2021.

Drew Fahiya from Creditsafe attributes some failures to ventures already in distress, possibly delayed by government support.

Businesses like the Prop Factory, once successful in the corporate event industry, saw a dramatic downturn due to Covid. Founder Carmen Croxall's company, despite a 2022 uptick, has remained 46% down and begun liquidating assets.

Similarly, Lorna Reeves, the country's first LGBTQ+ wedding planner, also faced a decline as Covid altered client behaviors and budgets. She has now transitioned to a new venture, MyOhMy Events.

Claire Hattrick's beauty salon suffered a critical hit during lockdowns and subsequent price hikes, forcing her to sell her business assets and start a new endeavor focused on menopause support.

Despite some recovery, late payments are still an issue. UK companies delayed invoice payments 45% of the time in 2023, up from 35% in 2021, with an average delay of over 11 days. The US marked the slowest global payment rates.

Insolvency experts like Stephanie Buckley of the Insolvency Company have seen a range of factors contributing to business collapse, including health issues, recruitment challenges, inflation, and the ramifications of Covid and Brexit.

Officials such as the small business commissioner Liz Barclay emphasize the critical nature of prompt payments to suppliers to prevent further business failures.

Tina McKenzie of the Federation of Small Businesses warns that there may be a delayed impact on businesses, with potential financial strain extending into the future, despite potential economic improvements.